Park Place plan to leave Nevada Power OK’d by PUC

Tuesday, Aug. 13, 2002 | 11:04 a.m.

Park Place Entertainment Corp., owner of Caesars Palace, Bally's and Paris-Las Vegas, has become the sixth company to declare its intent to leave Nevada Power Co.

The Public Utilities Commission of Nevada on Monday unanimously approved the company's application to purchase energy from Reliant Resources Inc., Houston, beginning Dec. 1.

Under terms of the PUC agreement, Park Place will pay an exit fee of $591,732 to leave the Nevada Power system to compensate existing utility customers.

The exit fee would compensate Nevada Power and its remaining customers for revenue shortfalls occurring over about three years. By then, utility officials said, the company expects it would compensate for the loss of those companies with growth and new customers.

Park Place joins five other companies that took advantage of a new state law that permits companies to leave the grid.

In their last session, Nevada lawmakers approved legislation that allows customers that average at least one megawatt of electricity use over the course of a year to apply to the PUC to buy electricity on the open market.

Companies that left the grid last month were Rouse Fashion Show Management LLC, operator of the Fashion Show mall, and casino operators MGM MIRAGE, Station Casinos Inc., Coast Hotels and Casinos Inc., and Gordon Gaming Corp., operator of the Sahara hotel-casino.

Nevada's consumer advocate has said consumers won't pay higher electricity rates as big casinos and other companies leave Nevada Power and sign up with alternative electricity providers.

Advocate Tim Hay said that's because:

The loss of big customers slashes the amount of electricity Nevada Power must buy to serve them.

Lower future electricity loads reduce the need for Nevada Power to build expensive generating plants -- plants whose costs are eventually paid for by all users large and small.

Big companies leaving the Nevada Power grid are required to pay exit fees to cover their share of Nevada Power's fixed costs accumulated while serving the exiting customers.